Question

Which of the following is always TRUE for a company in perfect competition?

a) Precio = Ingreso Marginal

b) Price = Average Total Cost

c) Price = Average Variable Cost

d) Marginal Income = Average Total Cost

Answer 1

Price = average total cost

reason: in perfect competition, price equals average total cost in the long run.
In the short run, if the industry is making profits, more firms will enter and drive the price down. If the industry is making loss, some firms will exit. This will drive  the price higher. In the long run, the price will equal average total cost, and firms will make zero economic profits. This is the long run equilibrium imperfect competition that will always be true.